Enterprise Community Partners announced a new program to provide tenants with the wealth-building opportunities traditionally limited to landlords while preserving up to $1 billion in affordable housing and labor.
Backed by Enterprise’s national affordable housing platform and fund management experience, the Renter Wealth Creation Fund aims to raise $250 million from investors. The fund will provide returns for investors while creating upward mobility for tenants, who earn immediate cash back for on-time payments and the ability to share in the appreciation of the property over the long term. Enterprise expects the fund to preserve 7,000 homes.
“The Renter Wealth Creation Fund is a direct response to what renters have told us they want: more cash on hand today and the ability to achieve long-term upward mobility,” said Lori Chatman , President of Enterprise’s Capital Division. “With their feedback, we’ve created a financial innovation that delivers returns for investors, loyalty and stability for landlords and, for the first time, real wealth-building potential for tenants.”
Chatman will become interim co-CEO of Enterprise in November.
According to the national housing nonprofit, the fund, which was launched by its subsidiary Enterprise Community Investment, benefits residents of the affordable rental housing projects it invests in in multiple ways:
1. Cash Back: Each month, residents who pay their rent on time receive cash back through Stake, a mobile app that enables the transfer and use of these refunds;
2. Services to residents: Each property will offer services tailored to the needs of residents; and
3. Shared appreciation: Like owners who take money out of a sale, long-term residents – current and former – can receive a share of the profits if the property is refinanced or sold for a profit. When this happens, investors receive a targeted financial return of 4%, and residents who have lived in the building for at least four years are expected to receive 80% of the financial benefit thereafter as an additional cash reward .
“The Renter Wealth Creation Fund recognizes that there is more than one way to create wealth and more than one way to define it,” said Chris Herrmann, chief investment officer and fund manager of the real estate equity business. of Enterprise. “Through focus groups and surveys, residents have made it clear that wealth is not just about long-term returns. Wealth is also having enough money to know next month’s rent bill won’t break the bank, to order dinner instead of cooking after a long day at work, or to provide the family with a afternoon at the cinema. The Tenant Wealth Creation Fund was designed to reflect this reality.